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A bi-level electricity market clearing process was developed for energy and reserve allocation in the day-ahead market using AC Optimal Power Flow (ACOPF). An energy-consuming entity (ECE) which does not want its cleared demand to be curtailed, even if any contingency occurs, purchases power from the reserve market at a higher rate. The proposed model helps the ECE to secure a reserve market allocation at the price of the energy market in the real-time market settlement. Various market models were formulated for the evaluation of locational marginal pricing (LMP) in the energy market and locational contingency marginal reserve pricing (LCMRP) in the reserve market. The impact of wind farms on LMP, LCMRP, and negative LMP was analyzed. The increase in demand requirement in the deregulated environment was balanced in the proposed models by the thermal–wind coordination dispatch. The market models were illustrated with the IEEE 30 bus system.

Investigations of Various Market Models in a Deregulated Power Environment Using ACOPF